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and the market value of the goods. If the contract is for the sale and delivery when three years old of a colt now running with its dam, an action for a present breach will be ineffectual if the damages are to be assessed upon the basis of the present value of the colt. If, however, the contract is for the future sale of wheat, and the seller, anticipating a steadily rising market, makes an early repudiation of the contract at a time when the buyer may, at slight advance, supply himself in the market, in an action for the breach, are the damages to be estimated according to the market price when the contract was repudiated or the market price at the time fixed for delivery? $ 1752. — It is a general principle that a party claiming
damages must do what reasonably he may to make those damages as small as possible. Applying this principle to the cases stated, it has been said to be the rule that "even if the seller repudiates the contract before the date of delivery, so that the buyer may sue at once, the damages are to be assessed as of the agreed date of delivery, unless it appears that the buyer could have supplied himself in the market on such terms as to mitigate his loss.” 1
$ 1753. This is in accordance with the often-cited rule laid down by Cockburn, C. J.,? that, on repudiation by the promisor, the promisee may at once bring his action as on a breach of the contract, “and in such action he will be entitled to such damages as would have arisen from the non-performance of the contract at the appointed time, subject, however, to abatement in respect of any circumstances which may have afforded him the means of mitigating his loss." And in the latest case upon the question, the supreme court of the United States has declared that “as to the question of damages, if the action is not premature, the rule is applicable that plaintiff is entitled to compensation based, as far as possible, on the ascertainment of what he would have suffered by the continued
1 Hale on Damages, p. 243.
? In Frost v. Knight, L. R. 7 Ex., at p. 113.
breach of the other party down to the time of complete performance, less any abatement by reasơn of circumstances of which he ought reasonably to have availed himself.” 1
$ 1754. — How, when seller refuses to give term of credit as agreed.- Where the seller does not refuse to deliver the goods at all, but refuses to deliver them upon the term of credit agreed upon and insists upon payment in cash, the same general principles still apply.
If the market price for cash and the contract price on credit were the same, the buyer has still sustained a loss. "Credit
tended without interest is, in effect, a sale at the stipulated price less the interest for the period of credit. The damages for a breach of contract to pay money at a particular date is the lawful rate of interest for the period of default, unless some other penalty is imposed by the agreement. So it would seem that if the buyer, in order to supply himself with the articles which the seller was obligated to sell, is compelled to buy from another, and to pay cash, one element of recovery for the breach would be interest upon his purchase for the period of credit.” ?
$ 1755. — The buyer, however, would not be justified in paying more to a third person than he can obtain the goods for from the original seller by paying cash. Notwithstanding the seller's default, it is held that the general duty of the buyer to mitigate his loss still applies, and if he can buy the goods of the original seller for cash for less than he can buy them in the market, he is bound to do so. “The obligation on the buyer to mitigate his loss, by reason of the seller's refusal to carry out such a sale, is not relaxed because the delinquent seller affords the only opportunity for such reduction of the buyer's damage.”
1 Roehm v. Horst (1899), 178 U. S. 2 Lawrence v. Porter (1891), 22 U.S. 1, 44 L. ed. 953, 20 Sup. Ct. R. 780, App. 483, 11 C. C. A. 27, 63 Fed. R. 62, stated in full ante, $ 1089. To like 26 L. R. A. 167, Mechem's Cases on effect: Austrian v. Springer (1892), Damages, 246. 94 Mich. 343, 54 N. W. R. 50, 34 Am. 3 Lawrence v. Porter, supra. To St. R. 350; Roper v. Johnson (1873), same effect: Warren v. Stoddart L. R. 8 Com. Pl. 167.
(1881), 105 U. S. 224, 26 L. ed. 1117.
§ 1756. Measure of damages where special circumstances were in contemplation. Thus far attention has been given to the ordinary consequences which result from the seller's breach of his agreement to sell and convey. Those consequences usually are that the buyer loses the excess in value which the goods might have over and above the sum which he was to pay to get them, and compensation for that loss ordinarily does full justice to the buyer.
But there may be cases in which the buyer had in view such a special or unusual use or purpose that this mere difference in value will not adequately measure it. If he had, two conditions will suggest themselves: Did he keep that peculiar use or purpose to himself, so that the seller had no intimation that any other than the ordinary consequences would ensue? Or did he, or did the circumstances, so fully disclose this special or unusual purpose that the seller may fairly be said to have had in his contemplation when he made the contract the losses which
In this last case Stoddart had agreed to supply Warren, a canvasser, with sets of a reprint of the Encyclopedia Britannica on thirty days credit. He afterwards refused to supply them except for cash on delivery. Thereupon Warren imported the Scotch edition at a vastly greater cost, and supplied them to his customers, and sought to recover the excess as damages. But the court held that interest for thirty days was the measure of his damages.
See also Deere v. Lewis (1869), 51 Ill. 254; Barker v. Mann (1869), 5 Bush (Ky.), 672, 96 Am. Dec. 373; Hassard v. Hardison (1895), 117 N. C. 60, 23 S. E. R. 96.
to credit was an important and essential provision of the contract. The law will not presume that defendants could have paid cash for the goods, and it surely did not require them to do what they are not shown to have been able to do." This case, however, is questioned in Lawrence v. Porter, supra. Compare Havemeyer v. Cunningham (1861), 35 Barb. (N. Y.) 515, distinguished in Lawrence v. Porter.
The law presumes money to be always procurable in the market at lawful [current] rates of interest (Lowe v. Turpie (1896), 147 Ind. 652, 44 N. E. R. 25, 37 L. R. A. 233, Mechem's Cases on Damages, 213); though the rule may be different where the party has been induced to rely on the promise of credit until too late to get money elsewhere. See Lowe v. Turpie, supra; Blood v. Wilkins (1876), 43 Iowa, 565; 1 Sutherland on Damages, p. 164.
Ability to pay cash.-There is, however, in Cook Mfg. Co. v. Randall (1883), 62 Iowa, 245, 17 N. W. R. 507, the statement that to require the parties "to pay cash when they had contracted for credit is not within the bounds of reason. The condition as
might accrue as a probable result of his breach of his agreement?
$ 1757. — General role of damages for breach of contract — Hadley v. Baxendale.- The general rule governing the allowance of damages for breach of contract generally has in view the two conditions referred to in the preceding section. As stated in substance in the famous English case of Fladley v. Baxendale,' and in the American case of Griffin v. Colver,? that
1 (1854) 9 Exoh. 341, Mechem's these special circumstances were Cases on Damages (2d ed.), 116. wholly unknown to the party break
2 (1858) 16 N. Y. 489, 69 Am. Dec. ing the contract, he, at the most, 718, Mechem's Cases on Damages could only be supposed to have had in (2d ed.), 126.
his contemplation the amount of in. The precise statement of the rule jury which would arise generally, and in Hadley V. Baxendale is this: in the great multitude of cases not af“Where two parties have made a fected by any special circumstances, contract which one of them has from such a breach of contract. broken, the damages which the other For, had the special circumstances party ought to receive in respect of been known, the parties might have such breach of contract should be specially provided for the breach of such as may fairly and reasonably contract by special terms as to the be considered either arising natu- damages in that case; and of this adrally, i.e. according to the usual course vantage it would be very unjust to of things, from such breach of con- deprive them.” tract itself, or such as may reason- The precise statement in Griffin v. ably be supposed to have been in the Colver, decided four years later, and, contemplation of both parties, at the so far as any internal evidence goes, time they made the contract, as the without knowledge of Hadley v. Bax. probable result of the breach of it.” endale, is this: “The broad, general Continuing further, the reasons are rule in such cases is, that the party given thus; “Now, if the special cir- injured is entitled to recover all his cumstances under which the contract damages, including gains prevented was actually made were communi- as well as losses sustained; and this cated by the plaintiff to the defend rule is subject to but two conditions: ant, and thus actually known to both the damages must be such as may parties, the damages resulting from fairly be supposed to have entered the breach of such a contract, which into the contemplation of the parties they would reasonably contemplate, when they made the contract, that would be the amount of injury which is, must be such as might naturally would ordinarily flow from a breach be expected to follow its violation; of contract under these special cir- and they must be certain, both in cumstances so known and communi- their nature and in respect to the cated. But, on the other hand, if cause from which they proceed."
rule is this: The party who has broken his contract is liable to make compensation to the other for all such losses resulting from that breach as are either (1) The ordinary, the usual, the commonly-to-be-expected
consequences of such a breach of such a contract; or (2) The peculiar or unusual consequences of the breach of the
particular contract in question, if, under the circumstances, it can fairly be said that both parties had those consequences in their contemplation, at the time the contract was made, as a probable result of its breach; and if those unusual consequences are neither uncertain in their nature nor remote as to their cause.
8 1758. — So far as liability for losses under the first
branch of the rule is concerned, there can, ordinarily, be but little difficulty. The law conclusively presumes that parties contemplate the usual and ordinary consequences of their acts, and it would not be necessary for the plaintiff to allege or prove that the defendant, in the particular case, did contemplate them; nor could the defendant escape responsibility by showing that they were not called to his attention and were, in fact, not within his contemplation.
$ 1759. — So far as liability under the second branch of the rule is concerned, it would be essential for the plaintiff to show, not perhaps that the defendant did actually contemplate the special consequences which might ensue from his breach of the contract,— for actual mental conditions are not easily inquired into - but that, under the circumstances, there was such notice or disclosure or other evidence of those consequences that it can fairly and reasonably be said that they must have entered into the contemplation of both parties, at the time the contract was made, as a probable consequence of its breach, and that therefore the defendant assumed them when he made his promise.
$ 1760. How these rules apply to sales.- Applying these principles to the subject now being considered, the first branch